Profile - John Halfpenny

Being an entrepreneur is about pushing and stretching to the limit

by The Chilli analysts

Wireless power transfer

On being an entrepreneur

The Cambridge phenomenon

Funding & angels

Tips on first business plan

John Halfpenny, ceo of Splashpower, a Chilli R2 startup in Cambridge, UK, started his entrepreneurial career as a teenager, selling cars and bikes. After graduating, John held various engineering positions within Texas Instruments before founding his own consulting firm, Micrologic. The company gradually offered a mix of products and services and grew to around thirty staff, with 80% of the revenues based on repeat business.

Micrologic was acquired by ARM in 1999. At ARM, Halfpenny became the company's Bluetooth programme manager, with spells in system-on-chip (SoC) consulting and third party intellectual property (IP) programmes. He was then appointed as ARM's director of embedded software, a post that he held until August 2002.

During this time, Halfpenny met James Hay and Lily Cheng, who had both graduated from Cambridge University in 2001. Cheng and Hay were working on a technique for wireless power transfer. Hay and Cheng won the £10K prize in the Cambridge University Entrepreneur's awards, and with help from Added Value Capital Partners, local entrepreneur Pilgrim Beart, and working for zero salary, they built a prototype. The functional prototype was ready prior to the company closing its Chilli R1 round. The company currently has eight staff and Halfpenny says, "We expect to grow the company to 20-30 people by Q2 2004.'

John Halfpenny

Wireless power transfer

The concept of Slashpower's proposition is simple: you could have a small pad - underneath a coffee table for example - which is connected to the mains. To charge your pda or mobile phone, just place it on the table, and it will be charged!

This is done through wireless charging technology - which enables a wide range of portable electronic devices to be powered wirelessly from a single platform. The company is dedicated to promoting wireless power as the de-facto standard for powering next generation mobile devices with the ultimate mission of delivering unparalleled convenience and true mobility to the consumer. The product is claimed to be cost-effective, safe and efficient. Not being considered a radio transmitter eases approval (it uses magnetic induction). The company has filed a number of patents on the charging method, and has announced some design wins, and has other NDA restricted design wins.

Splashpower recently conducted a marketing survey (unusual for a startup). Forty percent of respondents run out of power on their device once a week. The study was conducted to challenge their assumptions, and Halfpenny has also asked trusted partners to bend or break or test the patents.

On being an entrepreneur

Halfpenny enjoys being an entrepreneur, and emphasises the importance of stretching yourself and the team to its limits. "You don't always know best, and should try to channel other people's talents. If you're not learning, you're not progressing."

On this same theme he adds, "Be on the uncomfortable edge of leading edge - if you're comfortable, you're not trying hard enough." Some of his toughest moments have been 'having just enough savings to pay for one month's mortgage', and he also had to fire someone for the first time. The flip side to this was 'raising the first invoice', and doing the deal.

Halfpenny believes in pushing and stretching the startup team, and empowering them. "Having the founders committed is important." He also talks about the relationships. "Relationships with mates/co-founders changes as the company evolves - it just can't be avoided."

In addition, "OEM relationships require tools and processes to manage the business. Staff need to buy into the need for this."

The Cambridge phenomenon

On the success of the Cambridge cluster, Halfpenny is clear on its strengths, "The region has a history of innovation, has a global reputation through the work of the University, with good travel links, room for growth and is an excellent place to get introductions."

However, this is counterbalanced by some weaknesses, including, "it's a bit slow to change, and is in danger of being caught by surprise." Moreover, Halfpenny says, "Cambridge is full of innovators, but needs [additional] people [from] outside the local gene pool to ramp up innovations to a state where they can be commercially exploited - which has historically been a weakness."

He cited the example of a recent Cambridge-MIT dinner, and contrasted between the benefit-oriented pitches from the Americans and the technology-focused pitches from the British. Halfpenny concedes the chicken-and-egg challenge of encouraging outsiders to move to Cambridge, as many will not move until the area has demonstrated commercial success.

According to Halfpenny, "Entrepreneurs may know what to do in their domain, but they need wider support, especially in commercialisation. Few advisors to technology startups in the Cambridge area offer [commercialisation and marketing] domain expertise - this needs to change." As instances, Halfpenny cites that there are few global scale PR agencies catering for the high-tech sector in Cambridge.

Funding & angels

Halfpenny raises the spectre of the equity gap that is exposed after startups have received and spent their SMART award funding. "The government needs to encourage risk-taking. The loan guarantee scheme, where a director is still personally liable to an extent is a disincentive." As a way forward, Halfpenny is a proponent of Small Business Investment Community (SBIC) scheme, as used in the USA and reported here in The Chilli.

"The government should provide matching funds - they benefit indirectly through additional employment and tax receipts. A whole economy view is required." Citing the example of Minitel in France, Halfpenny states that government is the perfect vehicle for creating an infrastructure that enables a startup ecosystem.

Having worked with business angels successfully in the past, Halfpenny states, "Angels need more support and incentives. The risk of near-certain dilution discourages investment." In the case of Splashpower, local angel investment was readily found during Q4 2002, and a young, hungry VC fund were also interested in participating. As he looks forward towards closing his Chilli R2 round, Halfpenny observes, "Many funds are having a degree of difficulty and are thus risk averse. However, there are some enlightened funds looking for new opportunities." [Editor's note: entrepreneurs must take care to conduct their due diligence on those VCs actively investing].

Halfpenny's view on what VCs are looking at right now are summed up as 'an up and running business and a team with a track record.' He observes that more due diligence is being conducted to take the risk out of the process, but cautions that some VCs are on fishing expeditions, to show their limited partners that they are maintaining deal flow activity.

When asked about non-executive directors, Halfpenny had some tips for other startups:

- they are not there to rubber stamp decisions; they are there to do the actual work

- don't pay excessive expenses for their attendance at board meetings

- ask yourself what value are they adding?

Tips on first business plan

Halfpenny's advice to other entrepreneurs is not to stick to a strict format for their first business plan. "The plan needs to be the vision, the business model and how technology can support the plan, without excessively detailed financial projections. Explain in plain English what it is you will do, and remember that your objective with this plan is to enthuse potential investors, get them committed to invest." Simple advice for effective results, but so often overlooked as startups get buried in the greatness of their technology idea or unrealistic financial plans.

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© Chilli Publishing Ltd 2003

06SEP2003